Tanzania's troubled power utility firm recently received a shock when the government cancelled a tender that would have boosted its power generation capacity.

William Ngeleja, the Minister for Energy and Minerals, confirmed the government had revoked the tender for the purchase of two generators to be located in Dar es Salaam and Mwanza.

Mr Ngeleja said an evaluation conducted early last year by the Tanzania Electric Supply Company Limited (Tanesco) showed that the national grid required an additional minimum 160MW.

"Since Tanesco is owned by the government and the process of acquiring and operating the power plants is expensive, the power utility asked the government for financial support," he said.

Mr Ngeleja said the $120 million 100 MW plant in Dar es Salaam would run on locally produced natural gas while the $80 million 60MW plant in Mwanza would use heavy fuel oil -- because transmission of electricity over a long distance reduced the quality of power.

Of the 30 companies that bid for the Dar es Salaam project, only five returned their documents; and out of the 28 that bid for the Mwanza project, only four returned their documents.

The government said that after Tanesco scrutinised the tenders and handed them to the ministry, they were asked to submit other details including the lifecycle cost analysis for the project, which is estimated at 30 years for such plants.

It is said that the Ministry of Energy and Minerals discovered Tanesco's evaluation in relation to the Mwanza project never took into consideration the running costs.

For the Dar es Salaam plant, it was noted Tanesco picked a bidder who had offered to generate 130 MW when the tender clearly stated the plant would generate 100 MW.

"Even though the country needed the extra 30 MW it wasn't part of the requirement and would have added to the costs," said Mr Ngeleja.The ministry nullified the bidding process and asked that it be conducted afresh.

As per the Public Procurement Act, 2004 and in order to acquire the generation plant on time, the government instructed that the procurement procedure be conducted within 75 days from the date of cancellation.

For the Dar es Salaam plant, it was noted Tanesco picked a bidder who had offered to generate 130 MW when the tender clearly stated the plant would generate 100 MW.

"Even though the country needed the extra 30 MW it wasn't part of the requirement and would have added to the costs," said Mr Ngeleja.The ministry nullified the bidding process and asked that it be conducted afresh.